Pro-Crypto Democrats Withdraw Support for Stablecoin Bill at the Last Minute
A coalition of US Senate Democrats advocating for the cryptocurrency sector has expressed their opposition to a Republican-backed stablecoin bill if it proceeds with its current provisions.
This stance poses a significant risk of delaying legislation that could set the first regulatory framework for stablecoins in the US, as detailed in a May 3 report by Politico.
According to the report, nine Senate Democrats stated in a joint declaration that the bill “still has numerous issues that must be addressed.” They emphasized that they would not back a procedural vote to advance the legislation unless modifications are implemented.
The statement was signed by Senators Ruben Gallego, Mark Warner, Lisa Blunt Rochester, and Andy Kim, all of whom previously supported the bill during its passage through the Senate Banking Committee in March.
The bill, introduced by Senator Bill Hagerty, is officially titled the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
Related: Fed’s Powell reaffirms commitment to stablecoin legislation
Senate prepares to vote on stablecoin bill
The Senate is anticipated to start discussing the bill on the floor in the upcoming days, with the first vote possibly occurring next week.
The crypto industry has hailed the bill as a significant move toward regulatory clarity. However, the Democrats’ shift indicates increasing concern within the party.
Despite certain amendments made to the bill post-committee approval to address Democratic apprehensions, the lawmakers argued that the changes were insufficient. They urged for enhanced safeguards regarding Anti-Money Laundering, national security, foreign issuers, and accountability measures for noncompliant entities.
The statement was also endorsed by Senators Raphael Warnock, Catherine Cortez Masto, Ben Ray Luján, John Hickenlooper, and Adam Schiff.
A copy of the statement. Source: Alex Thorn
Senator Kirsten Gillibrand and Senator Angela Alsobrooks, who co-sponsored the bill with Hagerty, were not included in the list.
Despite their reservations, the Democratic senators reaffirmed their dedication to developing responsible crypto regulation. They reportedly expressed their eagerness to collaborate with colleagues to resolve these issues.
Related: US banks are ‘free to begin supporting Bitcoin’
Crypto needs a stablecoin bill
On April 27, Caitlin Long, founder and CEO of Custodia Bank, criticized the US Federal Reserve for subtly upholding a crucial anti-crypto policy that favors stablecoins issued by large banks, despite easing crypto partnership regulations for banks.
Long noted that while the Fed recently repealed four prior crypto guidelines, a January 27, 2023, statement remained in effect in collaboration with the Biden administration.
This guidance, according to Long, prevents banks from directly engaging with crypto assets and restricts them from issuing stablecoins on permissionless blockchains.
However, Long pointed out that once a federal stablecoin bill becomes law, it could potentially overrule the Fed’s position. “Congress should hurry up,” she insisted.
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